>> up next, the secrets of silicon valley. >> host: name of the book, "secrets of silicon valley," the author, deborah, you write that silicon valley is its own unique ecosystem, what do you mean by that? >> guest: it's a distinctive culture based on cooperation, collaboration, and consensus. in washington, d.c., it's a

foreign concept, but while many people discuss elements, what i did is take a step back and being an outsider gave me the perspective to draw in and say what is it that makes the culture connect? it is this ecosystem where you have educational institutions, your capitalists, your lawyers, bankers, accountants, and many other factors that make up the ecosystem, and people are involved in the process of an entrepreneurs idea from start to finish. it makes it unique with the engagement. >> host: you say there's something between stanford, palo alto, google, and mountain view.

>> guest: that's correct. i'm trying to capture the essence and looking at it from the outsider's perspective of what would somebody want to know about silicon valley? what could they learn from it? it's for entrepreneurs, people interested in how it works up to corporate america and government to learn from the unique way of the bubble based economy that silicon valley is based on meaning if you were trying to generate, as a government, trying to generate new revenue, silicon valley has the answers. if you're trying to explore and ignite better innovation within your companies, silicon valley has the answers, and from an entrepreneur's standpoint, how is it different than in other places which it is because so much is based on failure and learning from one's experiences,

but it's also recognizing that you can be part of the process of adopting other people's ideas, or you may have the idea for the next big thing, but bottom line is there's an authenticity to the way things are done in the valley that's accepted no matter who you are. >> you go on to write that failure is a badge of honor. >> guest: yeah, it is. i have to say i'm not completely convinced across the board. i don't nay anyone wants to go in knowing that entrepreneur is going to fail, but there is a batting average, and most tell you out of ten, you know, investments that they make, they hope for one big hit, three that will do okay, and the rest probably will fail, but when you're talking about an individual investor, which is how i got my initial investment, she didn't go in there wanting to fail in moving $5 million, which she did invest in my

company. >> host: did she lose it? >> guest: no, she has not lost it. >> host: deborah, how did silicon valley development? >> guest: that's such a fantastic, vast story because not one person owns that story, so when i was researching for this book and people would found out i was working on the book, back to the 1950s when the electronics industry and certainly our semiconductors that followed really started to evolve, but i go all the way back in looking at the efforts of leeland stanford, the founder of stanford university, and the commitment he made in recognizing that students needed to have direct usefulness in life, and he felt science was the vanguard, something that was ignored by east coast universities so he was looking to build something very different. on top of that what he did was he made sure that there was

connectivity between stanford and the surrounding industry, the little there was during that time, in addition to professors getting involved in civil civics engagements as well, be on the board of planning commissions and really having a voice in the development of palo alto and the surrounding community, and from there, i think, i definitely identify the leading factors that create silicon valley, but i think that william shockley and the whole treacherous eight, eight guys who worked for the semiconductors who got fed up with the management style and also wanted to continue down the path of semiconductors in new jersey, and william couldn't make up his mind what he wanted to do, so these guys explored what really became the first venture capital investment, although they didn't know at the time, and it was not what they

were planning on doing. what they they thought were doing to do was to be part of a new business unit of an exiing company, but really what they did was develop their semiconductor and out of those companies, spun out other companies and out of those companies, those original co-founders that were all involved in the semiconductor, they estimate up to 130 companies that have come out of it, and what it did was it made it very acceptable to be able to spin out, you know, be satisfied or have a great idea one day and start a company the next. >> host: who was leeland stand ford, and how did stanford university come about? >> guest: unfortunately, over tragic events. leeland stanford made money, came west in the gold rush, but he didn't make money actually in gold. he made his first, but, you know, batch of money really supplying miners with the tools

they needed. he knew the west would expand dramatically and recognized that railroads, they needed transportation, infrastructure, so he was a railroad who made an absolute fortune, ran for governor, got very, very involved in california, very involved at the federal level, and then, unfortunately, he and his wife waited to have their child, lee land, jr -- they had him at -- leeland was 44 years old, she was 49 years old, and just prior to to leeland, jr.'s 16th birthday, he contracted typhoid fever and died in florence, italy. it was a tragic event. the stanford looked for an opportunity to really comem rate their son and figure out how can all of california's children be

their children and best serve, you know, this growing western population in a way to commemorate their son, and out came the birth of leeland stanford, jr. university. >> host: and herbert hoover was the first student at stanford. >> guest: yeah, interesting story there. he deemed the first student because he moved into the dorm first. >> host: deborah, can you underestimate the importance of stanford to silicon valley? >> guest: no, you truly can't. when we first moved there, we had been living in the washington, d.c. area for 18 years and moved out there less than seven years ago, and people said don't you want your kids to go to stanford? i said, no, the east coast school, learn, get entrenched in the culture and understand what it's like to live in difficult winters. it was an academic environment i was used to being schooled on the east coast.

now living there for nearly seven years, it is unparalleled collaborative environment that stanford provides, so based in collaboration and students working together and they have to mark it on the syllabus, student cannot work together. there's so much collaboration and commitment in science and new engineering and technology, but also how stanford works with the surrounding community and the next generation of kids. the opportunity for k-12 kids starting with being nursery school is just remarkable that those kids have additional advantage, i think, of being raised in the area irrespective of what their socioeconomic status is of having the exposure to the religion and support of entrepreneurship, and i think most kids who attend stand ford

university, young adults, have a desire to do some form of entrepreneurship whether it's their companies themselves or a startup. it dictates that culture. >> host: in your book, "secrets of silicon valley," here's a quote, "in washington," you write" i was in the grateful for the how it win skill that treat me welled today, but i didn't do anything because people in washington, d.c. don't do anything other than pine and deliberate over the latest, often inconsequential, political, and/or policy spin." >> guest: yes. so i have a great love of washington, d.c., it's a wonderful place. i was an observer, and now i've

cread three companies in nearly six years, and i think the difference is that the importance of which side of the political aisle you're on, who you support, which issue are you going to put forth trumps anything that would foster a collaborative and creative environment. i went from an environment of people asking me, well, who do you work for? to what is your passion and how can i help you? i went into deep culture shock moving west and trying to understand this way without people wanting something in return. that was quite an adjustment. >> guest: you come from a conservative republican background, senator mac, george rp bush, independent women's forum, is it tough to be a conservative republican in silicon valley? >> guest: no, it's not. you know, i say that people care about issues more so than

politics, per se. i did a briefing on capitol hill earlier, and questions came up, oh can washington get more engaged, and the response was stay out. you know, they don't want you there, just allow you to do what they do best which is technology and output of that is innovation, so there is great concern for the environment in cleaning water, in fixing problems that billions of people are affected to. in addition to recognizing that, you know, there's authenticity in the way things are done there. the value is really placed on following through on your passion, nothing to do with politics. >> does silicon valley in general, and i hate to generalize like that, but do they pay attention to what's going on in washington? >> guest: no, no, no, and, really, if you look back recently, yes, there is a

presence by some of the bigger companies overall, but i think some of the greatest challenges, i wrote an op ed about this in the "wall street journal" this past week is really about what gets in the way. what are the barriers to innovation? it could be the pa tent controls in the fact that there's $50 million, the general council of cisco was here a few weeks ago to testify on capitol hill about that. that's 50 million dollars of what they now consider an innovation tax in fighting litigation that could be rather put into research and development, and so, you know, there's not a great interest in washington, but more about how to move the needle forward. they look to the east rather than the west. >> host: did your washington experience help you in silicon valley? >> only in theceps of i developedded a thick skin, and clearly, you need a thick skin, but the skills do not transfer

very well, you know, just learning, i was schooled in the art of war, and that just is not the way that the valley operates. it is more about how can i help you rather than you don't have to be my enemy, and what was really interesting to me is sometimes competitors will actually, you know, have a creative way to partner together, to have them profittize their product or ideas to validate it and give it credibility. it was quite uniquely a dichotomy where i came from. >> host: you talk about innovation against innovation. what do you mean? >> guest: well, what i mean by that are countries that a often concerned with trying to replicate the valley think they need to be silicon valley, and invention is the big idea, but invention comes very, very, you know, we are definitely going through an exponential time, but

that expo exponential time is based on innovation, really improving upon what's already existing out that. there's the distinction. it's just a new con cement, a completely disruptive technology versus innovation can be a simple term in improving upon this in your own local community, so i tell these jurisdictions that i sometimes can poll to now, that, really, you should be just looking to improve upon things. l.a., los angeles, was trying to fix its traffic problem spending $450 million sick newsing light -- sink newsing lights. that's innovation. it doesn't have to be a brand new, disruptive technology. >> host: back to stanford, deborah. you write in "secrets of silicon valleys," that professors are paid consultants to businesses. is that unusual? >> guest: it is unusual.

i understand it's done more so now, but originally, stand ford had a con cement because, again, it was about having greater connectivity to what was truly going on in the business world, and this all dates back to leeland stand ford -- stanford, that need to really understand how to best prepare students is only done through the seamless system in having the exposures, and stanford has an extremely strong licensing department, and because of that, you know, innovations or invengeses, such as google have profited dramatically because it was larry paige who went to the licensing office and said, you know, i need a patent. i need to shop this around. the intention was not necessarily to build a company initially, and so the benefits of stanford is that they now claim over 6,000 companies came from stanford whether it's the company itself or a business plan was created there, and

fiscal, you know, financially, they benefit tremendously. stanford made, you know, off the equity investment, google mde $336 million alone in loyalty income, so not bad. >> host: well, speaking of google, is google the giant in silicon valley? >> guest: you know, i think there's many giants. i have to say, i mean, i'm incredibly partial to google only in theceps that i think what they did was not only adopt the silicon valley culture, but then they massively expanded it, and what's so interesting to me, i mean, there's two sides of thought. they were willing to do whatever they could to create this incredible creative environment for people to flourish and work with them so whether it was the 20% rule where they allowed people to have a day a week to do whatever they want, whether it was adopting more of the silicon valley lifestyle into the workplace, so now, you know,

when we first arrived at google, i saw that campus for the first time and thought, well, it's colorful, two stories, how could they take it seriously? now they expanded way beyond that and you'll be run over by bicycles or roller blades or some new fun outdoor activity, and it's just a lawing people to the freedom to be creative. it's not about, you know, sitting in a cubicle from eight to six and trying to ignite innovation in that environment. >> host: you write in "secrets of silicon valley," the perks of google, on-site massages, scooters, rollerblades, free food. >> guest: some of the best food you've ever had. there's a counter argument that it's designed to keep people there. when you get or oil changed, haircuts, and doctor's appointments, but it allows

people to gt daily needs done in the course of the workday so what nay are home with the families, they spend quality time together. >> host: deborah, you applied for a job there. you had an interview. >> guest: i did. >> host: you write about that. >> guest: i did. i was not purposely planning on applying for a job, but my resumé ended up on the desk of someone there, got a call from human resources and start the going through that onerous process where what google does is get multiple people engaged in different departments to have to green light you to the next stage, and the final stage, that i did not make, they would have looked at the gpas and sat scores. >> host: from a hundred years ago, well, not a hundred, but -- >> guest: no, really, a hundred years, which was daunting, but i understand

trying to throw the most brilliant people in the room together, not discrediting myself here, but there is an algorithm in the way they do everything, and hiring is part of the process. >> does washington understand silicon valley? >> guest: absolutely not. i'm not sure it's supposed to. i think washington is trying to look at it from the perspective of the industrial relic. if you say the word "entrepreneur," it's not necessarily well embraced, you know, it's perceived as unemployed, not knowing what you want to do in life, or you're this small business owner, and nobody in silicon valley thinks of themselves as a small business owner. you know, you think whether you're going to build a company for ten people or 10,000 people, you know, you really do have a very different start up

mentality overall, so i think washington is looking from certainly an economic standpoint, you know, we look through the lens of economics and traditional monetary and fiscal policy. there's a lot to learn to the third leg of the stool that that offer is culture and how culture can play into a regional economy. >> you don't write about this, but can you compare detroit and the car industry to silicon valley and the differences, or are they alike? >> guest: no, i don't know that they are alike. it's been extraordinary. first of all, the one time i think silicon valley took in significant amount of money, that company fail. that's saying something right there, but, you know, no, i don't compare, and i don't want to claim that i know detroit really well. i've. -- i've only been there once. the turn around with the companies is fantastic, but what i think detroit is doing is getting more in tuned into the

technologies of silicon valley, and i write in the book that it's more important to have an office in silicon valley than it is in noshes or washington because if you don't pay attention to where technologies are heading, you're going to be working at the same place kodak did, a multibillion dollar company going out of business practically overnight without understanding where the technology was happening, and the iphone really put them out of business. >> host: you write governments around the world, most notably, china, russia, norway, south korea, and finland send delegations to silicon valley to discover the secrets to stand in the pavilion of graduate school in stanford, and there's a myriad of languages spoken, ect., ect.. >> guest: it is remarkable and exciting, and it's not just limited to the business school.

i mean, you can be -- my 7-year-old twin boys took a math class in the math building at stanford because, again, they offer these opportunities for the surrounding children, and you could be standing there, and i think the class was from six to eight on a thursday night, and you will see bus loads of chinese tourists, you know, just marching and parading into the main quad with cameras everywhere. it's a must stop place on their, you know, tour of the area, and now i understand why, and it truly is something to learn from. >> host: why did you move out there? >> guest: originally, it was my husband's job. he had a job transfer, but it was my work that kept us there. >> host: and you started a couple companies. what are they? how did you begin them? >> guest: i did. you know, really by default, but it is, i think, not necessarily a temperature call silicon valley story, but certainly one

you hear often. i wanted to figure out what the whole startup world was about. i was not real familiar with it, and ended up working at another startup when i first moved out there, and kind of just took a backseat, and i thought, well, this is really interesting the way it works because, again, there was much more open dialogue and transparency than i was used to, and the ceo would literally disclose all the terms of how the company was doing, and that was really interesting to me, but, unfortunately, that particular company went belly up, but the investor from that company came to my co-founder and i said and i like you guys, figure out something to do, and i'll fund you. it was literally an initial $250,000 investment with no business plan, not much of a decision or sure where we were going. he was an engineer. you know, i had a content background, and we thought let's reach this together, see what happens, developed steady

confidential, which became one of the leading managing websites for women, and out of that, a couple years later, we built the alley to the valley community which is a leading community for women in intern -- entrepreneurship, private equity, and adventure capital for the deal flow, but opened it as well just to recognize in order to have deal flow, that a lot of women really needed to be able to participate, and lastly, i got absolutely fascinated in where science was heading, and realized after spending time at singularity university for the research of the book, that i needed to change the school where my kids were attending, and i was fascinated by these future sciences in artificial intelligence, robotics, nanotechnology, and felt that there needed to be some sort of gaming around the way, particularly boys and kids like to play, but having them get

exposure to where these future technologies lie because our academic system is so trapped in a 20th century work force, and we want to have exposure to what the 20th century work force would look like. singularity university is one of the most remarkable workplaces i've been to. it's in moffit field, cofounded by two of the great futurist thinkers, and what peter really wanted to do was bring together the world's leading scientists, technologists, entrepreneurs under one roof, and figure out how to join together to best spur the exponential technologies with particular focus on the greatest needs in the world. you know, how do we get clean water? how do we get clean air, and

they hae thir areas of discipline, and really brought together numerous people around the world, not just for the purposes of a four-year traditional university, which it is not, but it's more for an executive education program, for entrepreneurs in between interneuroships, and for over longer periods of time where you can learn what innovation is about. >> host: only a few minutes left, be you write, "we told it was easy to meet people, but it was hard to get to know them." >> guest: yeah, yeah, it was. it's an entrenched, you know, community. on the one hand, it was incredibly ohm. i was in line at the banks, the store, and people would just talk to you, you know, and introduce themselves and find out you were new to town and ask who you could meet, but at the same time, there is a little bit

of an entrenched community around stanford. you're an alumni of stanford or the company, but it is this tight collaboration that makes silicon valley what it is, but so much of it is bilt on these relationships that either came out of stanford or existing companies, sco it takes a little time to find your rhythm there. >> host: what's the downside to silicon valley? >> guest: well, there's a lot of concern with the socioeconomic status. it's an incredibly expensive place to live. i write about the as no , toundg cost, and blaming the housing costs on the entire world crisis feeling if more people could enter into silicon valley, we'd have more technologies, advancement, and opportunities for people to get engaged in the muse muscular economy of what silicon

valley offers, and, you know, the question i'll always have is is there a point when there's too much technology, too much availability, too much expoture because once that's out there, out there. >> host: "secrets of silicon valley," currently number three, what everyone else learns from the innovation capitol of the world. this is "the communicarson

>> sandra day o'connor was the first woman to serve. she looks back at